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What Is the Purpose of Setting a “Maximum Slippage Tolerance” on a DEX Trade?

Maximum slippage tolerance is a setting that cancels a DEX trade if the execution price is too far from the quoted price, protecting the trader from excessive price impact.
Greeks.Live10.11.25

What Is the Purpose of Setting a “Maximum Slippage Tolerance” on a DEX Trade?

Maximum slippage tolerance is a parameter set by the trader that dictates the maximum percentage difference they are willing to accept between the quoted price and the final execution price. If the actual slippage exceeds this tolerance, the trade will automatically fail.

This protects the trader from excessive price impact in volatile or low-liquidity conditions, ensuring they do not get an unreasonably poor execution price. It is a crucial risk management tool.

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